Critically evaluation of the role of insurance within a wider system Essay

Critically evaluation of the role of insurance within a wider system of risk financing and management - Essay Example They may audit firms to make sure that their risk management practices are adequate to guard against risk. This paper will examine risk management, in general, along with examining risk management in the case of banks, cyber firms, and farming. Risk Management Risks must be identified, and this is the first part of the risk management process, according to Carter et al. (1994). The identification process of risks may be approached by a combination of methods, including intuitive management; using department experts; using standard questionnaires and checklists; using expert computer-based systems; using structured interviews; through brainstorming sessions; or using outside specialists/consultants. The second process is risk quantification, and this means that the impact and probability of a each risk is estimated for each risk. After that, the estimate is quantified by using a spreadsheet which estimates timescales and costs. The next process is risk prioritising and filtering,which means that the important risks are recognized and controlled, and risks are prioritized according to whether they care a Category 1 risk (cost effect only); Category 2 risk (contingency plans and costs affected); or Category 3 risk (programme contingency and cost affected). The Category three risks are the higher priority, and the risks are prioritized from there. ... Mitigating strategies include avoiding the risk altogether by removing the cause of the risk; transferring the risk, which means that the risk is passed to somebody capable of handling that particular risk; reduction of the risk, which would consist of investing in insurance or some other up-front investment; management of the risk, which means that the risk is managed continuously until it is managed out; and contingency, in which funds are produced for the risks which are of low likelihood and impact, or have not been revealed. The next step after that is risk monitoring, reporting and control, which necessitates the use of a risk register, which is carried out by the risk manager. A risk audit is the step after his, which ensures that proper procedures are being followed to manage the risk. The final step is the project completion, which means that the risk manager assesses the project after completion, and assesses the adequacy of the risk management. Interplay Between Insurance and Risk Management According to MacMinn (1987), there is an interplay between insurance and risk management. Specifically, corporations purchase insurance as one way to control their risk (Arrow, 1964). While there is the theory that purchasing insurance is sometimes inefficient for a firm, because the cost of the insurance often exceeds the expected loss, so many firms who are risk averse would not want to purchase insurance because they are interested in maximizing profits, insurance still plays a large role in risk management (Godfrey et. al, 2009). This is because, according to Godfrey et al.(2009), the markets do not always behave rationally. When a corporation does not purchase insurance, that corporation is assuming that the

Communication Barriers Research Paper Example | Topics and Well Written Essays - 2500 words

Communication Barriers - Research Paper Example   Communication is a very important skill since it plays a decisive role in determining people’s tendency to be productive in the workplace, neighborhoods, classrooms, and all kinds of settings. The communication skills of an individual affect his/her own as well as the organization’s effectiveness as a whole (Brun, 2010; Summers, 2010). Although many people can communicate enough to convey their meaning and perceive others’, not many people are able to communicate effectively. Lack of effective communication is one of the most fundamental factors that inhibit the effectiveness of an organization (Lutgen-Sandvik, 2010). The process of communication involves encoding and sending of the messages by the senders and decoding of the messages by the receivers (Lunenburg, 2010, p. 2; Ergen, 2010, p. 2). Interferences in the process of communication reduce the effectiveness of communication and may even distort the process altogether. ... ess of communication, it is imperative that senders and receivers develop the skills to handle the different kinds of barriers that distort the process of communication (Lehman and DuFrene, 2008). Barriers experienced in the process of communication are of different types that include but are not limited to verbal, nonverbal, external, and internal. Types of communication barriers Verbal barriers Verbal barriers in communication are caused because of inadequate vocabulary or lack of knowledge of the other person’s language (Ergen, 2010). Verbal barriers in communication are typically experienced in culturally diverse workplaces where workers belonging to different cultures and having proficiency in different languages have to interact with one another in a standard language according to the policy of the organization. Even if the vocabulary is enough to carry out the conversation, the differences of dialects and speed of speech pose difficulties in achieving effectiveness in c ommunication. For example, Indians’ way of speaking English is significantly different from that of African Americans’. Even within the native population of America, a range of regional dialects of English prevails. Differences in perception are also characterized as verbal barriers in communication. Differences in perception are influenced by socioeconomic background, educational background, age, experiences, and culture. People from different age groups have different levels of maturity that cause them to voice different opinions that can often be conflicting with one another’s. Differences in socioeconomic status and educational status pave way for the development of inferiority or superiority complexes among the interacting partners that reduce the effectiveness of communication.